Hotel Industry Braces for Thousands of Property Closings

More than 3.7 million hotel-related jobs could be lost nationwide as more than 38,000 hotels close permanently if Congress doesn’t provide more pandemic-related financial aid for the industry this year, according to a new industry group analysis.

The Washington, D.C.-based American Hotel & Lodging Association said half the total job losses – more than 1.6 million workers – would be among those directly employed by U.S. hotels, citing pre-pandemic employment figures, job loss data through September, and findings of a recent member survey. The rest of the job losses would be among vendors, service providers and other employers that are highly dependent on the hospitality industry.

The results come as U.S. hotel occupancy was 48.6% for the week of Sept. 13-19, down 31.9% from the same time last year, according to the latest data from travel research firm STR, which is owned by CoStar Group. Average daily room rates were nearly 29% lower than the year-earlier week, while revenue per available room fell more than 51%, STR reported.

Conditions are causing many hotel owners to face problems refinancing loans or finding buyers, raising the chance for property shutdowns and foreclosures, according to analysts.

“Their predictions are in line with what we are hearing; it is really getting bad,” said Alan Reay, president of hotel brokerage and consulting firm Atlas Hospitality Group, said in an interview about the hotel association's new projections.

The group estimates California would take the heaviest hit in permanent hotel closings at more than 3,800, followed by Texas at 3,700, Florida with 2,500 and New York with 1,500.

The association predicted that fallout, which could occur within the next six months, in the event that Congress does not provide new aid including the extension of payroll protection plan funding, and other provisions of the Coronavirus Aid, Relief, and Economic Security, or CARES, Act including loans to businesses that serve the hotel industry.

The travel industry was also among sectors that received special federal funding as pandemic disruptions began to affect the economy in late March, though industry leaders have said that money is now running out.

“It’s time for Congress to put politics aside and prioritize the many businesses and employees in the hardest-hit industries,” said hotel association CEO Chip Rogers in a statement that accompanied results of a recent national survey of 1,000 group members.

While analysts and executives have painted a picture of a deteriorating financial situation for hotels in the pandemic, the report results are being issued by a lobbying group with a mission to present the figures and data that present the strongest argument possible for the need for more federal aid.

That lobbying was in play during a recent conference call with White House Chief of Staff Mark Meadows, where industry leaders said the most pressing concerns include access to liquidity and debt service, along with liability protection as hotels, airlines and other travel sector businesses look to bring customers back.

Even so, the association says the industry data across the board shows pronounced deterioration in demand no matter what numbers it highlights. The hotel association said 68% of industry respondents to its Sept. 14-16 national survey said they have less than half their typical, pre-crisis staff working full time. Half of hotel owners said they are in danger of foreclosure by their commercial real estate debt lenders because of COVID-19.

About 74% of respondents said without further government assistance, they would be forced into further layoffs, after thousands nationwide have already lost their jobs, and two-thirds of hotels report they will only be able to last six months at current projected revenue and occupancy levels without further financial aid.

Many U.S. hotels are operating at half or lower capacity because of coronavirus-related travel slowdowns, and others have yet to reopen since mid-March restrictions took effect in states across the country.